How to Calculate What the Conversion Ratio for Currency Was Applied

by Mark Kennan, studioD

Different currencies have different values. When calculating the conversion ratio that was applied to your currency conversion, you must account for the conversion fees. Many banks and other converters calculate the fee as a percentage of your total conversion, so the more money you convert, the higher the fee. Only after accounting for the fee can you accurately calculate the conversion ratio that was used in the transaction.

Divide the conversion fee percentage by 100 to convert to a percentage rate. For example, if the bank charges a 0.5 percent conversion fee, divide 0.5 by 100 to get 0.005.

Subtract the conversion fee rate from 1. For this example, subtract 0.005 from 1 to get 0.995.

Multiply the amount of currency you converted by the result to account for the currency conversion fee. In this example, if you converted $100 to euros, multiply $100 by 0.995 to get $99.50.

Divide the amount of currency you received after the conversion by the result to find the applied currency conversion rate. In this example, if you received 69 euros, divide 69 by 99.50 to find the conversion rate applied equals 0.6934 euros per dollar.

About the Author

Mark Kennan is a writer based in the Kansas City area, specializing in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."

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